Cramer on Banks: The Market’s Most Undervalued Stocks?
Riots in Greece or not, and regardless of still more debt downgrades in the EU, stocks ultimately will trade on future earnings, Cramer said Wednesday. And the companies with the biggest upside surprises will continue to outperform for that reason.
That’s why Cramer has dedicated this entire week to April’s top earnings beats – think Starwood Hotels and Weyerhaeuser. These stocks have the best prospects going forward, and they’re the names you want to buy even when the market looks tenuous and volatile. Because underneath those wild ups and downs are strong businesses showing real signs of recovery.
The banks are definitely a part of this group. Cramer said the quarters we saw from JPMorgan Chase, Bank of America and Goldman Sachs proved the credit markets are steadily improving and that these stocks might be “some of the most undervalued names out there.” Yeah, there’s a lot of fear around what financial regulation could mean for the sector, but Cramer just isn’t all that worried anymore.
Cramer likes BofA and Goldman, though the first hasn’t dipped enough to buy and Lloyd Blankfein’s company is under a lot of pressure right now. But he’s definitely bullish on JPM, and another name he thinks is going to $12 in 2012: Citigroup .
This $4 stock represents a company that beat the Street’s earnings expectations by 15 cents a share when it reported (analysts expected Citi merely to break even). Revenues jumped 42% from the previous quarter, and at the same time provisions for credit losses and for benefits and claims declined over 21% sequentially to $8.6 billion, the lowest level since the first quarter of 2008. Also, net credit losses were down 16%.
The quarter was proof that CEO Vikram Pandit is turning his firm around, Cramer said. And he especially likes the overseas business, which accounts for 50% of revenues and makes Citi the leader in emerging markets. The Mad Money host recommended buying C stock as the government unloads its 27% share of the bank. That should give investors plenty of great entry points.
“I want you to use the government’s sloppy selling of its stake as an opportunity,” Cramer said, “to get into an international powerhouse that’s masquerading as a domestic also-ran.”
Cramer’s charitable trust owns Bank of America, Goldman Sachs, JPMorgan Chase and Weyerhaeuser.
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